TIDMBVIC
RNS Number : 0367G
Britvic plc
24 May 2017
Britvic plc Interim Results - 24 May 2017
Covering the 28 weeks ended 16 April 2017.
"A strong first half performance, confident of meeting market
expectations for FY17"
Group Financial Headlines:
-- Revenue increased 11.5% to GBP756.3m
-- Pre-exceptional EBITA* increased 6.7% to GBP73.6m
-- Organic revenue* increased 3.7% and organic pre-exceptional EBITA* increased 5.1%
-- Profit after tax decreased 4.9% to GBP38.6m, impacted by
GBP5.8m of exceptional and other items
-- Adjusted earnings per share* increased 9.2% to 18.9p
-- Interim dividend per share of 7.2p, an increase of 2.9%
Strategic highlights:
-- Strong revenue growth, with all business units in growth compared to last year
-- Organic pre-exceptional EBITA margin* increased 10bps
-- Successful management of cost inflation through disciplined
revenue management and cost efficiency
-- Actions taken to deliver GBP5m overhead savings in FY17
-- Complementary bolt-on acquisition of Bela Ischia completed in
Brazil, integration underway and on track to deliver R$10m of cost
synergies
-- Building quality distribution of Fruit Shoot in the USA
-- Business Capability Programme, on track to deliver
substantial cost benefits and commercial flexibility
28 weeks ended 16 28 weeks ended 10 % change Actual % change Organic
April 2017 GBPm April 2016 GBPm Exchange Rate Constant Exchange
Rate
------------------------------- -------------------- -------------------- -------------------- -------------------
Revenue 756.3 678.0 11.5% 3.7%
Pre-exceptional EBITA* 73.6 69.0 6.7% 5.1%
Pre-exceptional EBITA margin* 9.7% 10.2% (50)bps +10bps
Profit after tax 38.6 40.6 (4.9)% -
Basic EPS 14.7p 15.5p (5.2)% -
Adjusted EPS* 18.9p 17.3p 9.2% -
Interim dividend per share 7.2p 7.0p 2.9%
Adjusted net debt/EBITDA 2.4x 2.0x (0.4)x
------------------------------- -------------------- -------------------- -------------------- -------------------
* Items marked with an asterisk throughout this document are
non-GAAP measures, definitions and relevant reconciliations are
provided in the Glossary on page 10.
Simon Litherland, Chief Executive Officer commented:
"Britvic has delivered a strong first half performance driven by
organic revenue growth in all our markets and successful management
of input cost inflation. We have continued to make progress
delivering our strategic priorities and have exciting commercial
plans for the second half of the year. I am confident that we will
deliver full year performance in line with market
expectations."
For further information please contact:
Investors:
Steve Nightingale (Director of
Investor Relations) +44 (0) 7808 097784
Media:
Victoria McKenzie-Gould (Director
of Corporate Relations) +44 (0) 7885 828342
Ben Foster (Teneo Blue Rubicon) +44 (0) 203 603 5220
There will be a live webcast of the presentation given today at
10:00am by Simon Litherland (Chief Executive Officer) and Mathew
Dunn (Chief Financial Officer). The webcast will be available at
www.britvic.com/investors with a transcript available in due
course.
Notes to editors
About Britvic
Britvic is one of the leading branded soft drinks businesses in
Europe. The company combines its own leading brand portfolio
including Fruit Shoot, Robinsons, Tango, J2O, Teisseire and MiWadi
with PepsiCo brands such as Pepsi, 7UP and Mountain Dew Energy
which Britvic produces and sells in GB and Ireland under exclusive
PepsiCo agreements.
Britvic is the largest supplier of branded still soft drinks in
Great Britain ("GB") and the number two supplier of branded
carbonated soft drinks in GB. Britvic is an industry leader in the
island of Ireland with brands such as MiWadi and Ballygowan, in
France with brands such as Teisseire and Pressade and in Brazil
with Maguary and Dafruta. Britvic is growing its reach into other
territories through franchising, export and licensing. Britvic's
management team has successfully developed the business through a
clear strategy of organic growth and international expansion based
on creating and building scale brands. Britvic is listed on the
London Stock Exchange under the code BVIC and is a constituent of
the FTSE 250 index.
Cautionary note regarding forward-looking statements
This announcement includes statements that are forward-looking
in nature. Forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the group to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Except as
required by the Listing Rules and applicable law, Britvic
undertakes no obligation to update or change any forward-looking
statements to reflect events occurring after the date such
statements are published.
Market data
GB take-home market data referred to in this announcement is
supplied by Nielsen and runs to 15 April 2017. ROI take-home market
data referred to in this announcement is supplied by Nielsen and
runs to 26 March 2017. French market data is supplied by IRI and
runs to 2 April 2017.
Next scheduled announcement
Britvic will publish its quarter three interim management
statement on 27 July 2017.
Chief Executive Officer's Strategic Review
This year we have continued to make strong progress delivering
our long term strategic goals. The challenges we face in all our
markets have been well documented, however our relentless focus on
meeting consumer needs, successfully executing our commercial plans
and driving cost efficiency has translated into a strong first half
performance. We have delivered revenue growth in all our markets,
and our pre-exceptional EBITA* increased by 6.7%, enabling us to
declare a 2.9% increase in the interim dividend.
Generate profitable growth in our core markets
GB
The GB soft drinks market, as measured by Nielsen, is now
showing value growth ahead of volume. In all our markets, we have
experienced rising costs from underlying cost inflation and in GB
we have faced the additional burden from the weakening of sterling
leading to further cost increases for raw materials we purchase in
either Euro or US Dollar. We have led the value growth in the soft
drinks category and focused on driving value ahead of volume to
protect our profitability. We have continued to benefit from a
strong performance in our portfolio of immediate refreshment packs,
as well as in channels such as leisure and foodservice, where we
are winning and retaining major accounts such as Mitchells &
Butlers, Subway and KFC.
In the carbonates category, our focus on no and low sugar
offerings has continued to resonate with consumers. Despite a
highly competitive grocery market, Pepsi Max has continued to gain
volume and value share and we have seen a good performance across
the portfolio. In GB Stills, whilst we have seen a decline in
revenue, our performance trajectory has continued to improve and we
returned to volume growth. Robinsons in particular, whilst facing
pricing pressure in grocery, grew volume through a stabilisation of
the core pack formats and successful targeting of new occasions via
new pack formats such as Squash'd, dispense and core range bottle
sizes - with this innovation generating 12% of brand revenue this
year.
I am encouraged by the performance of our recent innovations
such as Drench and Purdey's, which we believe offer significant
future growth opportunities. Both brands are in strong growth and
we have recently extended Drench with the introduction of a range
of sparkling variants. In the second half of the year we will
benefit from the new Pepsi Max Ginger variant and the launch of
Robinsons "REFRESH'D". This ready to drink format offers a natural
formulation with no artificial ingredients and no added sugar,
enabling consumers to enjoy tasty, healthy hydration and the
initial trade and consumer response has been very positive.
France
The soft drinks market, as measured by IRI, has remained
subdued, reflecting both the challenging trading conditions and the
continued impact of the consolidation of procurement by grocery
retailers. Despite these headwinds, we have seen a strong start to
the year, driven by the growth of our branded portfolio. We have
focused our brand marketing on Pressade ahead of Fruité and this
was the main success in the first half, driven by the introduction
of the "Bonjour" range of breakfast time juices. In addition, Fruit
Shoot has continued to grow, benefiting from the recent
introduction of an Iced Tea flavour variant. In the second half of
the year we are adding another new flavour variant of Fruit Shoot,
a higher juice Fruit Shoot range called Fruizeo and extending the
appeal of Pressade with the launch of a new range of organic
syrups.
Ireland
The year has started very well in Ireland, with growth in both
our own brand portfolio and the Counterpoint wholesale business.
The biggest drivers have been Ballygowan water and MiWadi squash,
both benefiting from the consumer trend towards healthy hydration.
MiWadi has also benefited from the growth of the Zero sugar range
and the recent introduction of the MiWadi Mini super concentrate
pack format. Growth in Counterpoint has been further boosted by
additional business in Dublin following the successful completion
of the acquisition of East Coast.
Realise global opportunities in kids, family and adult
categories
Following an excellent first year in Brazil, we acquired Bela
Ischia in March of this year. Bela Ischia is a strong and well
recognised consumer brand with its largest presence in the key
areas of Rio de Janeiro and Minas Gerais. The acquisition
strengthens both Britvic's brand portfolio and geographical
footprint by complementing our existing strengths in Sao Paulo and
the North East. The acquisition will realise cost savings of at
least R$10m, principally from efficiencies in procurement,
production, logistics and administration.
Trading in Brazil in the first half of this year has been
challenging, reflecting the current volatile macro-economic
environment. Despite this, we have delivered organic revenue growth
as a result of the price increases implemented to recover the
impact of inflation. Last year we introduced Maguary Fruit Shoot
into Sao Paulo and following its initial success we are now using
the combined Ebba and Bela Ischia footprint to expand its presence
further in Brazil, launching across Sao Paulo state and into Rio de
Janeiro. Whilst the macro environment is likely to remain
challenging in the short-term, I am very confident that we have
built a strong platform for future growth.
Fruit Shoot in the USA has made further progress following the
launch of the multi-pack last year. We have continued to grow
multi-pack distribution, improving our packs, launching a new Fruit
Punch variant and focusing on delivering consistent in-store
execution. Later this year, we will further expand our range with
the introduction of Hydro flavoured water, whilst our efforts will
continue to focus on building both consumer trial and brand
awareness through sampling, digital marketing and consistent
on-shelf presentation. The single-serve pack format has continued
to progress, building listings following the route to market
transition and securing additional chiller placements.
Continue to step change our business capability
2017 finds us right in the middle of our three-year, GBP240m
business capability investment programme. The large PET line
installed in Leeds last year is now fully operational, delivering
the planned cost savings and starting to unlock some of the
anticipated commercial benefits. As well as a new 1.5 litre PET
contour bottle, we have launched a 3 litre PET carbonates pack that
is facilitating access to new commercial opportunities. Our Rugby
factory is undergoing substantial change this year, with major
groundworks, three new can lines and preparation for a new aseptic
line all underway. At our London site, the new large PET line is
now fully operational. Undergoing such a major change programme has
required a huge effort and level of commitment from the Britvic
team. Implementation challenges are inevitable with a programme of
this scale and I am proud of how the team continue to overcome
obstacles and keep us on schedule and on-track to deliver the
planned benefits. Once complete, this programme will step change
our ability to compete in the market and give us a fantastic
platform to grow the business.
Build trust and respect in our communities
The investment in our supply chain is also leading to broader
environmental as well as efficiency and commercial benefits. In
FY16 our new high-speed PET line in Leeds meant we could
lightweight our bottles which avoided the use of 155 tonnes of PET
packaging, equivalent to saving 443 tonnes of CO2. Already in the
first half of this year our investment has led to a 6% reduction in
our water ratio and a 3% reduction in our effluent ratio.
Public health is a key plank of our Trusted and Respected
pillar, and playing a proactive role in helping to address obesity
has been an integral part of our business strategy since 2013. We
have taken bold steps to help consumers make healthier choices
through reformulating our drinks with no compromise on taste or
quality, innovation in our products and range, and using the power
of our brands responsibly. Our actions have led to an annualised
calorie reduction across our portfolio of 19 billion since 2012,
and our innovation pipeline has been significantly weighted towards
better for you products for some time. We were the first UK soft
drinks company to introduce stevia and we removed the added sugar
Fruit Shoot range in GB in 2014 and the added sugar Robinsons range
in summer 2015. We have a Responsible Marketing Code and do not
market to under 12s. We do not advertise high sugar products to
under 16s and 83% of all advertising spend in GB in FY16 was on
low/no sugar products. Since 2005, all Pepsi advertising has been
led with sugar-free Pepsi MAX.
In the first half of the year we have continued to focus our
innovation on low and no sugar products with the launch of Club
Zero Rock Shandy in Ireland. We have also continued to work with
our customers to make it easier for consumers to make healthier
choices. From July 2016 to July 2017, Subway stores will have
removed around 3.7 billion calories from British diets after
converting to the Britvic/PepsiCo portfolio.
Finally, I am delighted that Britvic has for the first time been
listed in the independent 'Great Place to Work' rankings in all of
GB, France and Ireland. Britvic was the only soft drinks firm
listed in GB. This is testament to both the quality of our people
and their commitment to the business.
Outlook
We have again demonstrated in the first half our ability to
deliver our strategic priorities in the face of a challenging
external environment. As well as producing a good first half
financial performance we have continued to progress on our
long-term growth drivers and we are excited by the opportunities
that we have in our core markets and internationally. With a
portfolio of market leading brands, strong marketing plans for the
important summer period and clear strategic priorities for the
balance of the year we remain confident of meeting market
expectations for the full year.
Chief Financial Officer's Review
Overview
In the period, we sold over 1.1 billion litres of soft drinks,
an increase of 2.0% on the previous year, with Average Realised
Price (ARP*) of 61.8p, increasing by 1.5% on a constant currency
basis. Revenue was GBP756.3m, an increase of 11.5% (AER) compared
to last year and 3.7% on an organic constant currency basis.
Pre-exceptional EBITA* increased 6.7% (AER) to GBP73.6m, and
pre-exceptional EBITA* margin decreased 50bps (AER). Organic
margin, on a constant currency basis, increased by 10bps.
GB carbonates 28 weeks 28 weeks
ended ended % change
16 April 10 April
2017 2016
GBPm GBPm
---------- ---------- -----------
Volume (million litres) 644.4 631.2 2.1
ARP* per litre 46.7p 46.5p 0.4
Revenue 301.1 293.8 2.5
Brand contribution* 114.2 117.7 (3.0)
Brand contribution (220)
margin* 37.9% 40.1% bps
GB carbonates generated strong growth in the period as a result
of both volume and ARP growth. Brand contribution margin decreased
as a result of adverse mix, impact of foreign exchange on raw
materials and increased product costs impacting ahead of revenue
management actions. Second quarter revenue was flat, reflecting our
leadership of new price and promotional changes in grocery. Despite
the headwinds and a competitive cola category Pepsi, led by Max,
grew revenue and gained market share. Both Purdey's and R Whites,
which were relaunched last year, also delivered robust growth in
the first half of the year.
GB stills 28 weeks 28 weeks
ended ended % change
16 April 10 April
2017 2016
GBPm GBPm
---------- ---------- -----------
Volume (million litres) 177.0 174.3 1.5
ARP* per litre 81.3p 84.7p (4.0)
Revenue 143.9 147.7 (2.6)
Brand contribution* 66.9 69.7 (4.0)
Brand contribution
margin* 46.5% 47.2% (70) bps
GB stills revenue declined in the first half of the year, with a
1.5% volume increase outweighed by a 4.0% ARP decline. The ARP
decline was due to both adverse brand mix and pricing weakness in
the squash category. Encouragingly Q2 generated volume growth of
nearly 4%. Robinsons benefited from the introduction of new at-home
pack formats and growth out-of-home, where it is now available on
dispense in chains such as Subway and KFC. Fruit Shoot benefited
from growth in the flavoured water variant Hydro and the high juice
My5 variant, both generating double-digit volume increases. J20
declined in the second quarter as it transitioned to new
promotional price points in grocery.
France 28 weeks 28 weeks % change % change
ended ended actual constant
16 April 10 April exchange exchange
2017 2016 rate rate
GBPm GBPm
---------- ---------- ---------- ----------
Volume (million
litres) 142.1 137.7 3.2 3.2
ARP* per litre 94.8p 78.9p 20.2 3.2
Revenue 134.7 108.6 24.0 6.5
Brand contribution* 38.0 31.5 20.6 3.8
Brand contribution
margin* 28.2% 29.0% (80) bps (70) bps
Performance in France was strong in the first half, with volume
and ARP growth resulting in a 6.5% increase in revenue. Pressade
was the primary driver of growth, largely as a result of the
"Bonjour" juice range launch. Fruit Shoot revenue increased over
10%, supported by the launch of a new Iced Tea variant. Brands
continued to grow ahead of private label and now account for 62% of
revenue, compared to 50% on acquisition in 2010. The higher margin
syrups brands were broadly flat during the period.
Ireland 28 weeks 28 weeks % change % change
ended ended actual constant
16 April 10 April exchange exchange
2017 2016 rate rate
GBPm GBPm
---------- ---------- ---------- ----------
Volume (million
litres) 112.0 104.2 7.5 7.5
ARP* per litre 54.7p 49.1p 11.4 (1.1)
Revenue 80.3 62.9 27.7 13.3
Brand contribution* 27.2 21.5 26.5 10.6
Brand contribution
margin* 33.9% 34.2% (30) bps (80) bps
Note: Volumes and ARP include own-brand soft drinks sales and do
not include factored product sales included within total revenue
and brand contribution
Ireland has continued to grow, with both owned brands and
Counterpoint wholesale revenue increasing. Owned brand growth was
led by the stills portfolio, with Ballygowan and MiWadi the major
growth drivers. Counterpoint benefited from an improved offering
across its alcohol and snacks range as well as a small benefit from
the acquisition of East Coast towards the end of the period. Whilst
brand contribution increased, margin declined largely as a result
of adverse mix and rising product costs impacting ahead of revenue
management actions.
International 28 weeks 28 weeks % change % change
ended ended actual constant
16 April 10 April exchange exchange
2017 2016 rate rate
GBPm GBPm
---------- ---------- ---------- ----------
Volume (million
litres) 19.0 18.9 0.5 0.5
ARP* per litre 137.9p 110.6p 24.7 13.3
Revenue 26.2 20.9 25.4 13.9
Brand contribution* 8.6 3.9 120.5 109.8
Brand contribution
margin* 32.8% 18.7% 1,410 bps 1,500 bps
Note: Concentrate sales are included in both revenue and ARP but
do not have any associated volume.
International has generated revenue growth across all channels
with the exception of Asia, following the withdrawal from India
last year. The USA has benefited from the launch of Fruit Shoot
multi-pack last year as well as continued growth of singles. Whilst
volumes in Benelux were subdued, both revenue and brand
contribution have increased as a result of disciplined revenue
management and a focus on value ahead of volume. Offsetting the USA
volume growth was a decline in the Travel & Export sector
following a decision to withdraw from unprofitable contracts. Brand
contribution increased significantly as a result of the strong
pricing growth in Benelux and growth in the USA.
Brazil 28 weeks 28 weeks % change % change
ended ended actual organic
16 April 10 April exchange constant
2017 2016 rate exchange
GBPm GBPm rate
---------- ---------- ---------- ----------
Volume (million
litres) 98.1 102.6 (4.4) (10.0)
ARP* per litre 71.5p 43.0p 66.3 15.6
Revenue 70.1 44.1 59.0 4.0
Brand contribution* 14.4 9.1 58.2 3.3
Brand contribution
margin* 20.5% 20.6% (10)bps (20)bps
Brazil has benefited from the inclusion of Bela Ischia,
following the acquisition completion in early March and the impact
of foreign exchange movements. The underlying organic, constant
currency performance of Ebba across the first half was impacted by
the well documented macro-economic challenges in the country.
Underlying organic revenue increased 4.0% as a result of
significant price increases to recover cost inflation, whilst
underlying organic volume declined 10.0%. Reported and underlying
organic margin declined largely as a result of phasing of price
increases to recover product cost inflation.
Fixed costs 28 weeks 28 weeks % change % change
ended ended actual organic
16 April 10 April exchange constant
2017 2016 rate exchange
GBPm GBPm rate
---------- ---------- ---------- ----------
Non-brand A&P* (5.4) (6.5) 16.9 18.0
Fixed supply chain (56.4) (50.2) (12.4) (3.9)
Selling costs (67.6) (62.2) (8.7) (1.1)
Overheads and
other (71.7) (69.1) (3.8) 2.6
Total (201.1) (188.0) (7.0) 0.1
---------------------- ---------- ---------- ---------- ----------
Total A&P investment (31.5) (31.6) 0.3 4.8
A&P as a % of
own-brand revenue 4.3% 4.7% (40) bps (30) bps
A&P spend declined GBP0.1m (AER) and by GBP1.6m on a
constant currency basis, as a result of efficiencies in our
non-working A&P spend, which continues to reduce as a
percentage of our overall investment. Fixed supply chain costs have
increased largely as a result of incremental depreciation from our
GB investment programme, whilst overheads and other costs have
benefitted from our rigorous approach to cost control. We took
proactive cost action by extending our business capability
programme to incorporate GBP5m of overhead savings, and we have
implemented the actions to deliver this benefit in 2017. This
includes a flattening of our structure in some areas as well as
reducing duplication between our business units through the
combination of some roles.
Exceptional and other items
In the period, we accounted for a net charge of GBP7.2m of
pre-tax (GBP5.8m post tax) exceptional and other costs. These
include:
-- Acquisition and integration costs of GBP2.1m
-- Costs in relation to closure of operations in India of GBP0.1m
-- Strategic restructuring - business capability programme of GBP11.2m
-- Net impairment reversal of intangible asset carrying value GBP2.6m
-- Fair value gains of GBP6.2m
-- Unwind of discount on deferred consideration of GBP2.6m
The cash costs of exceptional and other items in the period were
GBP15.3m. Further detail on exceptional and other items can be
found on page 11 of the financial statements.
Interest
The net finance charge before exceptional and other items for
the 28-week period for the group was GBP11.0m compared with
GBP10.9m in the prior year.
Taxation
The underlying tax charge was GBP12.9m which equates to an
effective tax rate of 22.5% (28 weeks ended 10 April 2016: 23.5%).
The first half benefits from a reduction in the French corporate
tax rate which has generated a one-off benefit on our deferred tax
liabilities.
Earnings per share
Adjusted basic EPS* for the period was 18.9p, up 9.2% on the
same period last year. Basic EPS for the period was 14.7p compared
with 15.5p for the same period last year.
Dividends
The board is recommending an interim dividend of 7.2p per share,
an increase of 2.9% on the dividend declared last year, with a
total value of GBP19.0m. The interim dividend will be paid on 14
July 2017 to shareholders on record as at 2 June 2017. The
ex-dividend date is 1 June 2017.
Cash flow and net debt
Underlying free cash flow* was a GBP32.7m outflow, compared to a
GBP46.9m outflow the previous year. Working capital generated an
outflow of GBP12.8m (2016: GBP49.5m) benefiting from the reversal
of the additional payment run incurred in 2016, due to the
additional week last year and a continued focus on working capital
management across the business. Inventory costs increased due to a
pro-active decision to build stock to mitigate risk from the
business capability programme. Capital expenditure was GBP29.5m
higher than last year, driven by the continuation of the
transformational business capability programme in GB. Overall
adjusted net debt* increased by GBP133.9m and took our leverage to
2.4x EBITDA* from 2.0x last year. Half year net debt is a high
point for the group as a result of stock building ahead of the peak
summer trading period.
Treasury management
The financial risks faced by the group are identified and
managed by a central treasury department, whose activities are
carried out in accordance with board approved policies and subject
to regular Audit and Treasury Committee reviews. The department
does not operate as a profit centre and no transaction is entered
into for trading or speculative purposes. Key financial risks
managed by the treasury department include exposures to movements
in interest rates and foreign exchange rates whilst managing the
group's debt and liquidity, currency risk, interest rate risk and
cash management. The group uses financial instruments to hedge
against interest rate and foreign currency exposures. At 16 April
2017 the group had GBP1,075.4m of committed debt facilities
consisting of a GBP400.0m bank facility which matures in 2021, and
a series of private placement notes with maturities between 2017
and 2032, providing the business with a secure funding
platform.
At 16 April 2017, the group's unadjusted net debt of GBP731.1m
(excluding derivative hedges) consisted of GBP49.9m drawn under the
group's committed bank facilities, GBP675.4m of private placement
notes, GBP5.4m of accrued interest and GBP2.7m of finance leases,
offset by net cash and cash equivalents of GBP40.7m and unamortised
loan issue costs of GBP2.3m. After taking into account the element
of the fair value of interest rate currency swaps hedging the
balance sheet value of the private placement notes, the group's
adjusted net debt was GBP572.8m which compares to GBP438.9m at 10
April 2016.
Pensions
At 16 April 2017, the group had IAS 19 pension surpluses in GB
and NI totalling GBP14.4m and IAS 19 pension deficits in ROI and
France totalling GBP7.5m resulting in a net pension surplus of
GBP6.9m (2 October 2016: net liability of GBP17.4m). The net
surplus has increased primarily due to changes in the financial
assumptions and additional employer contributions made to the GB
plan of GBP20.0m partially offset by changes in demographic
assumptions. The defined benefit section of the GB plan was closed
to new members on 1 August 2002, and closed to future accrual for
active members from 1 April 2011, with new members being invited to
join the defined contribution scheme. The Northern Ireland scheme
is only open to future accrual for members who joined before 28
February 2006, and new employees are eligible to join the defined
contribution scheme. All new employees in Ireland join the defined
contribution plan. The 31 March 2016 actuarial valuation of the GB
plan was recently completed. Agreement has been made with the
scheme trustee on a number of key principles including allowing a
longer period to fund the deficit and agreeing that no additional
contributions will be payable over and above those payments to 2019
agreed at the 2013 valuation. Future contributions beyond 2019 will
be on a contingent basis. The Ireland and Northern Ireland Defined
Benefit Pension schemes have an investment strategy journey plan to
manage the risks as the funding position improves. The GB Pension
scheme mainly has credit-type investments and the Trustees have
developed proposals to manage the investment risks.
Risk management process
As with any business we face risks and uncertainties. We believe
that effective risk management supports the successful delivery of
our strategic objectives. The management of these risks is based on
a balance of risk and reward determined through assessment of the
likelihood and impact as well as the Company's risk appetite. The
Executive Team perform a formal robust assessment of the principal
risks facing the Company annually, which is reviewed by the Board.
Similarly, all business units and functions perform formal annual
risk assessments that consider the Company's principal risks and
specific local risks relevant to the market in which they operate.
Risks are monitored throughout the year with consideration to
internal and external factors, the Company's risk appetite and
updates to risks and mitigation plans are made as required. The
principal risks that could potentially have a significant impact on
our business in the future are set out on pages 28 to 31 of the
2016 annual report.
Glossary
Non-GAAP measures are provided because they are closely tracked
by management to evaluate Britvic's operating performance and to
make financial, strategic and operating decisions.
Volume is defined as number of litres sold, excluding factored
brands sold by Counterpoint in Ireland. No volume is recorded in
respect of international concentrate sales.
ARP is defined as average revenue per litre sold, excluding
factored brands and concentrate sales.
Revenue is defined as sales achieved by the group net of price
promotional investment and retailer discounts.
Brand contribution is a non-GAAP measure and is defined as
revenue less material costs and all other marginal costs that
management considers to be directly attributable to the sale of a
given product. Such costs include brand specific advertising and
promotion costs, raw materials, and marginal production and
distribution costs.
Brand contribution margin is a non-GAAP measure and is a
percentage measure calculated as brand contribution, divided by
revenue. Each business unit's performance is reported down to the
brand contribution level.
Pre-exceptional EBITDA is a non-GAAP measure defined as
operating profit before exceptional and other items, depreciation,
amortisation, impairment of PPE/intangible assets and profit/loss
from sale of PPE/intangible assets.
Pre-exceptional EBITA is a non-GAAP measure and is defined as
operating profit before exceptional and other items and
amortisation. Only amortisation attributable to intangibles related
to acquisitions is added back, in the period this is GBP5.3m (2016:
GBP3.6m). EBITA margin is EBITA as a proportion of group
revenue.
Adjusted earnings per share are a non-GAAP measure calculated by
dividing adjusted earnings by the average number of shares during
the period. Adjusted earnings is defined as the profit/(loss)
attributable to ordinary equity shareholders before exceptional and
other items adjusted for the adding back of acquisition related
amortisation. Average number of shares during the period is defined
as the weighted average number of ordinary shares outstanding
during the period excluding any own shares held by Britvic that are
used to satisfy various employee share-based incentive programmes.
The weighted average number of ordinary shares in issue for
adjusted earnings per share for the period was 262.9m (2016:
261.1m).
Underlying free cash flow is a non-GAAP measure and is defined
as net cash flow excluding movements in borrowings, dividend
payments and exceptional and other items.
Adjusted net debt is a non-GAAP measure and is defined as group
net debt, adding back the impact of derivatives hedging the balance
sheet debt.
Organic is a non-GAAP measure and excludes the impact of the
acquisition of Bela Ischia and on a constant currency basis.
Innovation is defined as new launches over the last three years,
excluding new flavours and pack sizes of established brands.
Revenue management is a measure and is used to define a range of
actions to affect ARP. It includes, but is not limited to, price
increases, changes to price promotions and variation pf pack
size.
Quality distribution is a measure used to describe the placement
of products in the appropriate outlets for the specified
product.
Retail market value and volume is a measure and is a measure of
the recorded sales at the retail point of purchase. This data is
typically collated by independent organisations such as Nielsen and
IRI from data supplied by retailers.
A&P is a measure of marketing spend including marketing,
research and advertising.
Non-working A&P is a measure of marketing spend that is not
spent directly on consumer facing activity. It would include, but
not limited to, agency fees, research and production costs.
Constant currency is a non-GAAP measure of performance in the
underlying currency to eliminate the impact of foreign exchange
movements.
Great Place to Work (GPTW) is a methodology process adopted by
businesses to measure employee engagement.
Non-GAAP reconciliations
Organic
Revenue EBITA
HY16 GBPm GBPm
28-week period ended
10 April 2016, as reported 678.0 69.0
Adjust for FX 47.2 0.5
28-week period ended
10 April 2016 @ constant
currency 725.2 69.5
-------- ------
HY17
28-week period ended
16 April 2017, as reported 756.3 73.6
Bela Ischia (4.2) (0.5)
HY17 Organic with HY16 752.1 73.1
-------- ------
EBITDA
28-week 28-week
period ended period ended
16 April 10 April
2017 2016
GBPm GBPm
Operating profit before
exceptional and other items 68.3 65.4
Acquisition related amortisation
(note 9 interim accounts 5.3 3.6
Pre-exceptional EBITA 73.6 69.0
-------------- --------------
Depreciation 21.5 17.1
Amortisation (non-acquisition
related) 4.6 4.6
Pre-exceptional loss/(profit)
on disposal of PPE 0.8 (0.1)
Pre-exceptional EBITDA 100.5 90.6
-------------- --------------
Free cash flow 28-week 28-week
period ended period ended
16 April 10 April
2017 2016
GBPm GBPm
Pre-exceptional EBITDA 100.5 90.6
Pre-exceptional working
capital movements (12.8) (49.5)
Purchases of intangible
and tangible assets (76.8) (47.3)
Net pension charge
less contributions (21.6) (22.6)
Net Interest and
finance costs (10.2) (9.8)
Income tax paid (14.0) (16.2)
Share based payments 4.2 5.2
Issue of shares 0.9 3.8
Purchase of own shares (3.2) (1.6)
Other 0.3 0.5
Underlying free cash
flow (32.7) (46.9)
-------------- --------------
BRITVIC PLC
INTERIM FINANCIAL STATEMENTS
For the 28 weeKSED 16 april 2017
Company number: 5604923
RESPONSIBILITY AND CAUTIONARY STATEMENTS
RESPONSIBILITY STATEMENTS
The directors confirm that to the best of their knowledge, this
unaudited condensed set of consolidated interim financial
statements has been prepared in accordance with IAS 34 'Interim
Financial Reporting' as adopted by the European Union, and that the
interim management report herein includes a fair review of the
information required by DTR 4.2.7R and DTR 4.2.8R.
CAUTIONARY STATEMENT
This report is addressed to the shareholders of Britvic plc and
has been prepared solely to provide information to them.
This report is intended to inform the shareholders of the
group's performance during the 28 weeks to 16 April 2017. This
report contains forward-looking statements based on knowledge and
information available to the directors at the date the report was
prepared. These statements should be treated with caution due to
the inherent uncertainties underlying any such forward-looking
information and any statements about the future outlook may be
influenced by factors that could cause actual outcomes and results
to be materially different.
DIRECTORS
The directors of Britvic plc are:
Gerald Corbett
Simon Litherland
Mathew Dunn
Joanne Averiss
Sue Clark
John Daly
Ben Gordon
Ian McHoul
Euan Sutherland
By order of the board
Simon Litherland
Chief Executive Officer
Mathew Dunn
Chief Financial Officer
Date: 23 May 2017
INDEPENT REVIEW REPORT TO BRITVIC PLC
Introduction
We have been engaged by Britvic plc (the 'company') to review
the condensed set of financial statements in the interim financial
report for the 28 weeks ended 16 April 2017 which comprises the
consolidated income statement, consolidated statement of
comprehensive income/(expense), consolidated balance sheet,
consolidated statement of cash flows, consolidated statement of
changes in equity and the related notes 1 to 19. We have read the
other information contained in the interim financial report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Directors' Responsibilities
The interim financial report is the responsibility of, and has
been approved by, the directors. The directors are responsible for
preparing the interim financial report in accordance with the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this interim financial report has been prepared in accordance
with International Accounting Standard 34, "Interim Financial
Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the interim financial
report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the interim financial report for the 28 weeks ended 16 April
2017 is not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European
Union and the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
Birmingham
Date: 23 May 2017
consolidated income statement
For the 28 weeks ended 16 April 2017
28 weeks 28 weeks 53 weeks
ended 16 April 2017 ended 10 April 2016 ended 2 October 2016
(unaudited) (unaudited) (audited)
------------------------------------ ------------------------------------ ------------------------------------
Before Exceptional Total Before Exceptional Total Before Exceptional Total
exceptional & other exceptional & other exceptional & other
& other items* & other items* & other items*
items items items
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------ ------------ -------- ------------ ------------ -------- ------------ ------------ --------
Revenue 756.3 - 756.3 678.0 - 678.0 1,431.3 - 1,431.3
Cost of sales (363.0) - (363.0) (313.1) - (313.1) (659.3) - (659.3)
------------ ------------ -------- ------------ ------------ -------- ------------ ------------ --------
Gross profit 393.3 - 393.3 364.9 - 364.9 772.0 - 772.0
Selling and
distribution
costs (221.9) (3.4) (225.3) (198.9) - (198.9) (402.3) - (402.3)
Administration
expenses (103.1) (2.1) (105.2) (100.6) 1.4 (99.2) (191.0) (2.3) (193.3)
------------ ------------ -------- ------------ ------------ -------- ------------ ------------ --------
Operating
profit/(loss) 68.3 (5.5) 62.8 65.4 1.4 66.8 178.7 (2.3) 176.4
Finance income 0.4 1.1 1.5 1.2 0.3 1.5 1.7 0.7 2.4
Finance costs (11.4) (2.8) (14.2) (12.1) (2.3) (14.4) (22.5) (4.4) (26.9)
------------ ------------ -------- ------------ ------------ -------- ------------ ------------ --------
Profit/(loss)
before tax 57.3 (7.2) 50.1 54.5 (0.6) 53.9 157.9 (6.0) 151.9
Taxation (12.9) 1.4 (11.5) (12.8) (0.5) (13.3) (36.3) (1.1) (37.4)
------------ ------------ -------- ------------ ------------ -------- ------------ ------------ --------
Profit/(loss)
for the period
attributable
to the equity
shareholders 44.4 (5.8) 38.6 41.7 (1.1) 40.6 121.6 (7.1) 114.5
------------ ------------ -------- ------------ ------------ -------- ------------ ------------ --------
Earnings per
share
Basic earnings
per share 9 14.7p 15.5p 43.8p
-------- -------- --------
Diluted
earnings per
share 9 14.6p 15.4p 43.5p
-------- -------- --------
Adjusted basic
earnings per
share** 9 18.9p 17.3p 49.3p
-------- -------- --------
Adjusted
diluted
earnings per
share** 9 18.8p 17.2p 49.0p
-------- -------- --------
* See note 7.
** Adjusted basic and diluted earnings per share measures have
been adjusted by adding back exceptional and other items (see note
7) and amortisation of acquisition related intangible assets. This
reconciliation is shown in note 9.
All activities relate to continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/(EXPENSE)
For the 28 weeks ended 16 April 2017
28 weeks ended 28 weeks ended 53 weeks ended
16 April 2017 10 April 2016 2 October 2016
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
------------------------------------------------------------ ----- --------------- --------------- ---------------
Profit for the period attributable to the equity
shareholders 38.6 40.6 114.5
Other comprehensive income:
Items that will not be reclassified to profit or loss
Remeasurement gains/(losses) on defined benefit pension
schemes 2.6 (36.1) (58.7)
Deferred tax on defined benefit pension schemes (3.1) 5.2 8.7
Current tax on additional pension contributions 2.9 3.0 3.3
Deferred tax on other temporary differences - - 0.2
------------------------------------------------------------ ----- --------------- --------------- ---------------
2.4 (27.9) (46.5)
------------------------------------------------------------ ----- --------------- --------------- ---------------
Items that may be subsequently reclassified to profit or
loss
Gains in the period in respect of cash flow hedges 15 10.1 26.1 68.5
Amounts recycled to the income statement in respect of cash
flow hedges 15 (20.4) (22.6) (64.1)
Amounts recycled to goodwill on acquisition of subsidiary - 10.2 10.2
Tax recycled to goodwill on acquisition of subsidiary - (2.0) (2.0)
Deferred tax in respect of cash flow hedges accounted for
in the hedging reserve 1.5 (0.5) (0.7)
Exchange differences on translation of foreign operations 15 6.5 16.4 36.5
Tax on exchange differences accounted for in the
translation reserve (0.9) 1.9 3.9
(3.2) 29.5 52.3
------------------------------------------------------------ ----- --------------- --------------- ---------------
Other comprehensive (expense)/income for the period net of
tax (0.8) 1.6 5.8
------------------------------------------------------------ ----- --------------- --------------- ---------------
Total comprehensive income for the period attributable to
the equity shareholders 37.8 42.2 120.3
------------------------------------------------------------ ----- --------------- --------------- ---------------
CONSOLIDATED BALANCE SHEET
As at 16 April 2017
16 April 10 April 2 October
2017 2016 2016
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
--------------------------- ----- ------------ ------------ -----------
Assets
Non-current assets
Property, plant
and equipment 11 423.6 299.5 382.4
Intangible assets 11 458.1 387.3 417.9
Other receivables 7.5 2.9 4.4
Derivative financial
instruments 15 95.6 76.9 98.6
Deferred tax assets 7.5 2.9 6.5
Pension asset 17 14.4 13.6 0.6
--------------------------- ----- ------------ ------------ -----------
1,006.7 783.1 910.4
--------------------------- ----- ------------ ------------ -----------
Current assets
Inventories 143.5 111.9 112.7
Trade and other
receivables 336.8 316.7 317.9
Current income
tax receivables 3.5 2.7 5.1
Derivative financial
instruments 15 40.0 57.1 81.0
Cash and cash equivalents 40.7 66.8 205.9
564.5 555.2 722.6
--------------------------- ----- ------------ ------------ -----------
Non-current assets
held for sale 1.4 2.8 1.4
--------------------------- ----- ------------ ------------ -----------
Total assets 1,572.6 1,341.1 1,634.4
--------------------------- ----- ------------ ------------ -----------
Current liabilities
Trade and other
payables (445.9) (401.9) (437.2)
Interest-bearing
loans and borrowings 12 (120.1) (161.2) (288.1)
Derivative financial
instruments 15 (1.7) (0.9) (1.1)
Current income
tax payable (6.5) (10.8) (13.1)
Provisions (3.8) (0.4) (6.8)
Other current liabilities (37.0) (2.4) (33.1)
(615.0) (577.6) (779.4)
Non-current liabilities
Interest-bearing
loans and borrowings 12 (611.0) (455.0) (491.7)
Deferred tax liabilities (52.6) (48.2) (53.0)
Pension liability 17 (7.5) (10.7) (18.0)
Derivative financial
instruments 15 (1.8) (0.8) (4.3)
Provisions (6.0) (1.5) (5.9)
Other non-current
liabilities (3.4) (27.3) (1.1)
--------------------------- ----- ------------ ------------ -----------
(682.3) (543.5) (574.0)
--------------------------- ----- ------------ ------------ -----------
Total liabilities (1,297.3) (1,121.1) (1,353.4)
--------------------------- ----- ------------ ------------ -----------
Net assets 275.3 220.0 281.0
--------------------------- ----- ------------ ------------ -----------
Capital and reserves
Issued share capital 13 52.7 52.5 52.6
Share premium account 132.7 128.0 129.1
Own shares reserve (2.2) (2.1) (3.3)
Other reserves 143.8 123.8 146.5
Retained losses (51.7) (82.2) (43.9)
--------------------------- ----- ------------ ------------ -----------
Total equity 275.3 220.0 281.0
--------------------------- ----- ------------ ------------ -----------
CONSOLIDATED STATEMENT OF CASH FLOWS
For the 28 weeks ended 16 April 2017
28 weeks 28 weeks 53 weeks
ended ended ended
16 April 10 April 2 October
2017 2016 2016
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
---------------------------------- ----- ------------- -------------- -----------
Cash flows from operating
activities
Profit before tax 50.1 53.9 151.9
Finance costs 12.7 12.9 24.5
Other financial instruments (5.0) (6.9) (13.6)
Impairment of property,
plant and equipment and
intangible assets (2.6) - 0.7
Depreciation 21.5 17.0 33.2
Amortisation 9.9 8.3 16.3
Share-based payments 4.2 5.2 6.6
Net pension charge less
contributions (21.6) (22.6) (25.9)
Increase in inventory (19.4) (6.7) (0.3)
(Increase)/decrease in
trade and other receivables (10.0) 1.8 10.9
Increase/(decrease) in
trade and other payables 20.1 (44.5) (40.3)
(Decrease)/increase in
provisions (3.2) (0.9) 3.3
Loss/(profit) on disposal
of tangible and intangible
assets 1.9 0.7 (0.3)
Income tax paid (14.0) (19.6) (34.2)
---------------------------------- ----- ------------- -------------- -----------
Net cash flows from operating
activities 44.6 (1.4) 132.8
---------------------------------- ----- ------------- -------------- -----------
Cash flows from investing
activities
Proceeds from sale of property,
plant and equipment - 0.7 6.7
Purchase of property, plant
and equipment (74.5) (43.3) (114.2)
Purchase of intangible
assets (2.3) (4.0) (7.7)
Interest received 0.5 1.2 1.7
Acquisition of subsidiary,
net of cash acquired 10 (60.9) (41.2) (41.2)
Net cash flows used in
investing activities (137.2) (86.6) (154.7)
---------------------------------- ----- ------------- -------------- -----------
Cash flows from financing
activities
Interest paid, net of derivative
financial instruments (10.7) (12.2) (22.2)
Interest-bearing loans
drawndown/(repaid) 12 (67.8) 3.7 104.5
Acquired debt repaid - (38.0) (38.0)
Repayment of USPP Notes 12 (119.6) - -
Drawdown of 2017 USPP 12 175.0 - -
Issue costs paid 12 (0.5) - -
Issue of shares relating
to incentive schemes for
employees 0.9 5.1 5.9
Issue of shares under a
non pre-emptive placing,
net of costs - (1.3) (1.1)
Purchase of own shares (4.1) (1.6) (2.1)
Dividends paid to equity
shareholders 14 (45.9) (42.6) (60.9)
Net cash flows used in
financing activities (72.7) (86.9) (13.9)
---------------------------------- ----- ------------- -------------- -----------
Net decrease in cash and
cash equivalents (165.3) (174.9) (35.8)
Cash and cash equivalents
at beginning of period 205.9 239.6 239.6
Exchange rate differences 0.1 2.1 2.1
---------------------------------- ----- ------------- -------------- -----------
Cash and cash equivalents
at the end of the period 40.7 66.8 205.9
---------------------------------- ----- ------------- -------------- -----------
By balance sheet category:
Cash and cash equivalents 40.7 66.8 205.9
40.7 66.8 205.9
---------------------------------- ----- ------------- -------------- -----------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 28 weeks ended 16 April 2017
Issued Share Own Other Retained Total
share premium shares reserves losses
capital account reserve (note
19)
GBPm GBPm GBPm GBPm GBPm GBPm
At 2 October
2016 (audited) 52.6 129.1 (3.3) 146.5 (43.9) 281.0
Profit for the
period - - - - 38.6 38.6
Other comprehensive
(expense)/income - - - (3.2) 2.4 (0.8)
---------------------- --------- --------- --------- ---------- --------- -------
Total comprehensive
(expense)/income - - - (3.2) 41.0 37.8
---------------------- --------- --------- --------- ---------- --------- -------
Issue of shares 0.1 3.6 (3.7) - - -
Own shares purchased
for share schemes - - (3.2) - - (3.2)
Own shares utilised
for share schemes - - 8.0 - (8.0) -
Movement in
share-based
schemes - - - - 4.8 4.8
Deferred tax
on share-based
payments - - - - 0.8 0.8
Movement in
non-distributable
profit - - - 0.5 (0.5) -
Payment of dividend - - - - (45.9) (45.9)
At 16 April
2017 (unaudited) 52.7 132.7 (2.2) 143.8 (51.7) 275.3
---------------------- --------- --------- --------- ---------- --------- -------
Issued Share Own Other Retained Total
share premium shares reserves losses
capital account reserve (note
19)
GBPm GBPm GBPm GBPm GBPm GBPm
At 27 September
2015 (audited) 52.2 123.2 (11.4) 94.1 (46.3) 211.8
Profit for the
period - - - - 40.6 40.6
Other comprehensive
income/(expense) - - - 29.5 (27.9) 1.6
---------------------- --------- --------- --------- ---------- --------- -------
Total comprehensive
income - - - 29.5 12.7 42.2
---------------------- --------- --------- --------- ---------- --------- -------
Issue of shares 0.3 4.8 (1.1) - - 4.0
Own shares purchased
for share schemes - - (1.6) - - (1.6)
Own shares utilised
for share schemes - - 12.0 - (11.5) 0.5
Movement in
share-based
schemes - - - - 4.9 4.9
Current tax
on share-based
payments - - 1.7 1.7
Deferred tax
on share-based
payments - - - - (0.9) (0.9)
Movement in
non-distributable
profit - - - 0.2 (0.2) -
Payment of dividend - - - - (42.6) (42.6)
At 10 April
2016 (unaudited) 52.5 128.0 (2.1) 123.8 (82.2) 220.0
---------------------- --------- --------- --------- ---------- --------- -------
notes to the financial information
For the 28 weeks ended 16 April 2017
1. General Information
Britvic plc (the 'company', the 'group') is a public limited
company, incorporated and domiciled in the United Kingdom. The
address of the registered office is: Britvic plc, Breakspear Park,
Breakspear Way, Hemel Hempstead, Hertfordshire, HP2 4TZ.
The company is listed on the London Stock Exchange.
These interim financial statements do not constitute statutory
accounts as defined by Section 434 of the Companies Act 2006. They
have been reviewed but not audited by the group's auditor. The
statutory accounts for Britvic plc for the 53 weeks ended 2 October
2016, which were prepared under International Financial Reporting
Standards (IFRS) as adopted by the European Union, have been
delivered to the Registrar of Companies. The auditor's opinion on
those accounts was unqualified and did not contain a statement made
under section 498 (2) or (3) of the Companies Act 2006.
The interim financial statements were authorised for issue by
the board of directors on 23 May 2017.
2. Basis of preparation
These interim financial statements comprise the consolidated
balance sheet as at 16 April 2017 and related consolidated income
statement, consolidated statement of cash flows, consolidated
statement of comprehensive income/(expense), consolidated statement
of changes in equity and the related notes 1 to 19 for the 28 weeks
then ended of Britvic plc ('financial information'). This financial
information has been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Services Authority and with the
International Accounting Standard (IAS) 34 'Interim Financial
Reporting' as adopted by the European Union.
3. Going concern
The directors are confident that it is appropriate for the going
concern basis to be adopted in preparing the interim report and
financial statements. As at 16 April 2017, the consolidated balance
sheet reflects a net assets position of GBP275.3m. The liquidity of
the group remains strong supported by GBP675.4m of private
placement notes with maturity dates between 2017 and 2032. In
addition, the group has a GBP400.0m bank facility with a maturity
date of November 2021. Details are provided in the group's 2016
annual report.
Group retained reserves are low due to the capital restructuring
undertaken at the time of flotation. This does not impact on
Britvic plc's ability to meet payments as they fall due or to make
dividend payments.
4. Accounting policies
This financial information has been prepared using the
accounting policies as set out in pages 101 - 108 of the group's
2016 annual report.
5. Seasonality of operations
Due to the seasonal nature of the business, higher operating
profits are usually expected in the second half of the year than in
the first 28 weeks.
6. Segmental reporting
For management purposes, the group is organised into business
units and has six reportable segments as follows:
-- GB Stills - United Kingdom excluding Northern Ireland
-- GB Carbs - United Kingdom excluding Northern Ireland
-- Ireland - including Northern Ireland
-- France
-- Brazil
-- International
These business units sell soft drinks into their respective
markets.
Management monitors the operating results of its business units
separately for the purpose of making decisions about resource
allocation and performance assessment. Segment performance is
evaluated based on brand contribution. This is defined as revenue
less material costs and all other marginal costs that management
considers to be directly attributable to the sale of a given
product. Such costs include brand specific advertising and
promotion costs, raw materials and marginal production and
distribution costs. However, group financing (including finance
costs) and income taxes are managed on a group basis and are not
allocated to reportable segments.
Transfer prices between reportable segments are on an arm's
length basis in a manner similar to transactions with third
parties.
28 weeks ended GB GB Total Ireland France Brazil International Total
16 April 2017 Stills Carbs GB GBPm GBPm GBPm GBPm GBPm
GBPm GBPm GBPm
Revenue 143.9 301.1 445.0 80.3 134.7 70.1 26.2 756.3
----------------------- -------- ------- ------ -------- ------- ------- -------------- -------
Brand contribution 66.9 114.2 181.1 27.2 38.1 14.4 8.6 269.4
----------------------- -------- ------- ------ -------- ------- ------- -------------- -------
Non-brand advertising
& promotion
* (5.4)
----------------------- -------- ------- ------ -------- ------- ------- -------------- -------
Fixed supply
chain** (56.4)
----------------------- -------- ------- ------ -------- ------- ------- -------------- -------
Selling costs** (67.6)
----------------------- -------- ------- ------ -------- ------- ------- -------------- -------
Overheads and
other costs* (71.7)
----------------------- -------- ------- ------ -------- ------- ------- -------------- -------
Operating profit
before exceptional
and other items 68.3
----------------------- -------- ------- ------ -------- ------- ------- -------------- -------
Net finance
costs before
exceptional
and other items (11.0)
----------------------- -------- ------- ------ -------- ------- ------- -------------- -------
Exceptional
and other items (7.2)
----------------------- -------- ------- ------ -------- ------- ------- -------------- -------
Profit before
tax 50.1
----------------------- -------- ------- ------ -------- ------- ------- -------------- -------
28 weeks ended GB GB Total Ireland France Brazil International Total
10 April 2016 Stills Carbs GB GBPm GBPm GBPm GBPm GBPm
GBPm GBPm GBPm
Revenue 147.7 293.8 441.5 62.9 108.6 44.1 20.9 678.0
----------------------- -------- ------- ------ -------- ------- ------- -------------- -------
Brand contribution 69.7 117.7 187.4 21.5 31.5 9.1 3.9 253.4
----------------------- -------- ------- ------ -------- ------- ------- -------------- -------
Non-brand advertising
& promotion
* (6.5)
----------------------- -------- ------- ------ -------- ------- ------- -------------- -------
Fixed supply
chain** (50.2)
----------------------- -------- ------- ------ -------- ------- ------- -------------- -------
Selling costs** (62.2)
----------------------- -------- ------- ------ -------- ------- ------- -------------- -------
Overheads and
other costs* (69.1)
----------------------- -------- ------- ------ -------- ------- ------- -------------- -------
Operating profit
before exceptional
and other items 65.4
----------------------- -------- ------- ------ -------- ------- ------- -------------- -------
Net finance
costs before
exceptional
and other items (10.9)
----------------------- -------- ------- ------ -------- ------- ------- -------------- -------
Exceptional
and other items (0.6)
----------------------- -------- ------- ------ -------- ------- ------- -------------- -------
Profit before
tax 53.9
----------------------- -------- ------- ------ -------- ------- ------- -------------- -------
53 weeks ended GB GB Total Ireland France Brazil International Total
2 October 2016 Stills Carbs GB GBPm GBPm GBPm GBPm GBPm
GBPm GBPm GBPm
Revenue 304.4 607.7 912.1 133.9 244.5 89.5 51.3 1,431.3
----------------------- -------- ------- ------ -------- ------- ------- -------------- --------
Brand contribution 133.9 250.7 384.6 48.4 75.9 17.5 9.7 536.1
----------------------- -------- ------- ------ -------- ------- ------- -------------- --------
Non-brand advertising
& promotion
* (12.2)
----------------------- -------- ------- ------ -------- ------- ------- -------------- --------
Fixed supply
chain** (96.9)
----------------------- -------- ------- ------ -------- ------- ------- -------------- --------
Selling costs** (126.4)
----------------------- -------- ------- ------ -------- ------- ------- -------------- --------
Overheads and
other costs* (121.9)
----------------------- -------- ------- ------ -------- ------- ------- -------------- --------
Operating profit
before exceptional
and other items 178.7
----------------------- -------- ------- ------ -------- ------- ------- -------------- --------
Net finance
costs before
exceptional
and other items (20.8)
----------------------- -------- ------- ------ -------- ------- ------- -------------- --------
Exceptional
and other items (6.0)
----------------------- -------- ------- ------ -------- ------- ------- -------------- --------
Profit before
tax 151.9
----------------------- -------- ------- ------ -------- ------- ------- -------------- --------
* Included within 'Administration expenses' in the consolidated
income statement. 'Overheads and other costs' relate to central
expenses including salaries, IT maintenance, depreciation and
amortisation.
** Included within 'Selling and distribution costs' in the consolidated income statement.
There has not been a material change to segmental assets and
liabilities with the exception of the acquisition of Bela Ischia
into the Brazil segment (see note 10).
7. Exceptional and other items
Exceptional and other items are those items of financial
performance that management believe should be separately disclosed
by virtue of the nature and infrequency of the events giving rise
to them to allow shareholders to understand better the elements of
financial performance in the period so as to facilitate comparison
with prior periods and to assess trends in financial performance
more readily.
28 weeks 28 weeks 53 weeks
ended ended ended
16 April 10 April 2 October
2017 2016 2016
Note GBPm GBPm GBPm
------------------------------ ------ --------- --------- ----------
Cost in relation to
the acquisition and
integration of subsidiaries (a) (1.9) (2.6) (5.2)
Gain on held for sale
properties - - 3.2
Strategic restructuring
- cost initiatives (b) - (0.5) (0.6)
Strategic restructuring
- business capability
programme (c) (11.2) (0.9) (8.4)
Net reversal of impairments (d) 2.6 - -
of trademarks
Costs in relation
to the closure of
operations (0.1) - (2.4)
Fair value movements (e) 5.1 5.4 11.1
Total included in
operating profit (5.5) 1.4 (2.3)
-------------------------------------- --------- --------- ----------
Fair value movements (e) 1.1 0.3 0.6
------------------------------ ------ --------- --------- ----------
Total included in
finance income 1.1 0.3 0.6
-------------------------------------- --------- --------- ----------
Fair value movements (e) - (0.3) (0.4)
Unwind of discount
on deferred consideration (f) (2.6) (1.5) (3.3)
Finance costs in relation
to the acquisition
and integration of
subsidiaries (g) (0.2) (0.5) (0.6)
------------------------------ ------ --------- --------- ----------
Total included in
finance costs (2.8) (2.3) (4.3)
-------------------------------------- --------- --------- ----------
Total exceptional
and other items before
tax (7.2) (0.6) (6.0)
-------------------------------------- --------- --------- ----------
a) Costs primarily relating to the acquisition and integration
of Bela Ischia Alimentos Ltda (Bela Ischia) in the current year
offset by the release of provisions for Empresa Brasileira de
Bebidas e Alimentos SA (Ebba). In the prior year costs relate to
employee costs, travel costs and advisors fees incurred on the
integration of Ebba.
b) Strategic restructuring - cost initiatives relate to the
continuation of cost initiatives announced in May 2013, following
the closure of two factories in Britvic GB and subsequent
reorganisation. This restructuring was completed in 2016.
c) Strategic restructuring - business capability programme
relates to a restructuring of supply chain and operating model to
enhance commercial capabilities in Britvic GB and Ireland.
Primarily these costs relate to employee costs, advisors fees and
dual running supply chain costs.
d) Net reversal of impairments of trademarks - these comprise of
a reversal of impairment in the Ballygowan trademark of GBP9.1m
offset by an impairment in the Britvic brand in Ireland of GBP2.2m
and an impairment in the Fruite brand in France of GBP4.3m.
e) Fair value movements relate to the fair value movement of
derivative financial instruments where either hedge accounting
cannot be applied to future transactions or where there is
ineffectiveness in the hedge relationship including gains on FX
forwards taken out as part of cash management for expected future
payments in relation to the deferred consideration of the purchase
of Ebba.
f) Part of the consideration for Ebba is due in September 2017.
This amount has been included on acquisition discounted to net
present value. The unwind of this discount until September 2017 is
shown as exceptional costs.
g) These costs relate to tax on funds injected into Brazil in
the current year and debt repayment charges incurred on the
repayment of acquired debt in the prior year.
Details of the tax implications of exceptional items are given
in note 8.
8. Taxation
The tax charge not including tax on exceptional and other items
is GBP12.9m (28 weeks ended 10 April 2016: GBP12.8m) which equates
to an effective tax rate 22.5% (28 weeks ended 10 April 2016:
23.5%).
Included in the total tax charge for the 28 weeks ended 16 April
2017 is a tax credit on exceptional and other items of GBP1.4m (28
weeks ended 10 April 2016: GBP0.5m charge).
Tax charge by region
28 weeks 28 weeks 53 weeks
ended ended ended
16 April 10 April 2 October
2017 2016 2016
GBPm GBPm GBPm
-------------------------------- --------- --------- ----------
UK 11.7 10.6 28.9
Foreign (0.2) 2.7 8.5
Total tax charge in the
consolidated income statement 11.5 13.3 37.4
-------------------------------- --------- --------- ----------
Analysis of tax charge
28 weeks 28 weeks 53 weeks
ended ended ended
16 April 10 April 2 October
2017 2016 2016
GBPm GBPm GBPm
------------------------------------- --------- --------- ----------
Current income tax charge 12.7 10.5 31.8
Deferred income tax (credit)/charge (1.2) 2.8 5.6
Total tax charge in the
consolidated income statement 11.5 13.3 37.4
------------------------------------- --------- --------- ----------
9. Earnings per share
Basic earnings per share amounts are calculated by dividing the
net profit for the period attributable to the equity shareholders
of the parent by the weighted average number of ordinary shares in
issue during the period.
Diluted earnings per share amounts are calculated by dividing
the net profit attributable to the equity shareholders of the
parent by the weighted average number of ordinary shares
outstanding during the period plus the weighted average number of
ordinary shares that are potentially issuable in connection with
employee share-based payment plans.
The following table reflects the income and share data used in
the basic and diluted earnings per share computations:
28 weeks 28 weeks 53 weeks
ended ended ended
16 April 10 April 2 October
2017 2016 2016
GBPm GBPm GBPm
------------------------------ --------- --------- ----------
Basic earnings per share
Profit for the period
attributable to the
equity shareholders 38.6 40.6 114.5
------------------------------ --------- --------- ----------
Weighted average number
of ordinary shares in
issue for basic earnings
per share 262.9 261.1 261.7
------------------------------ --------- --------- ----------
Basic earnings per share 14.7p 15.5p 43.8p
------------------------------ --------- --------- ----------
Diluted earnings per
share
Profit for the period
attributable to the
equity shareholders 38.6 40.6 114.5
------------------------------ --------- --------- ----------
Effect of dilutive potential
ordinary shares - share
schemes 0.9 2.5 1.5
------------------------------ --------- --------- ----------
Weighted average number
of ordinary shares in
issue for diluted earnings
per share 263.8 263.6 263.2
------------------------------ --------- --------- ----------
Diluted earnings per
share 14.6p 15.4p 43.5p
------------------------------ --------- --------- ----------
The group presents as exceptional and other items on the face of
the consolidated income statement, those significant items of
income and expense which, because of the nature and infrequency of
the events giving rise to them, merit separate presentation to
allow shareholders to understand better the elements of financial
performance in the period, so as to facilitate comparison with
prior periods and to assess trends in financial performance more
readily.
To this end, basic and diluted earnings per share are also
presented on this basis with the amortisation of acquisition
related intangible assets also added back using the weighted
average number of ordinary shares for both basic and diluted
amounts as per the tables below.
28 weeks 28 weeks 53 weeks
ended ended ended
16 April 10 April 2 October
2017 2016 2016
GBPm GBPm GBPm
---------------------------------- --------- --------- ----------
Adjusted basic earnings
per share
Profit for the period
attributable to equity
shareholders 38.6 40.6 114.5
Add: Net impact of exceptional
and other items 5.8 1.1 7.1
Add: Intangible assets
amortisation (acquisition
related) 5.3 3.6 7.4
---------------------------------- --------- --------- ----------
49.7 45.3 129.0
---------------------------------- --------- --------- ----------
Weighted average number
of ordinary shares in
issue for adjusted basic
earnings per share 262.9 261.1 261.7
---------------------------------- --------- --------- ----------
Adjusted basic earnings
per share 18.9p 17.3p 49.3p
---------------------------------- --------- --------- ----------
Adjusted diluted earnings
per share
Profit for the period
attributable to equity
shareholders before exceptional
and other items and acquisition
related intangible assets
amortisation 49.7 45.3 129.0
Weighted average number
of ordinary shares in
issue for adjusted diluted
earnings per share 263.8 263.6 263.2
---------------------------------- --------- --------- ----------
Adjusted diluted earnings
per share 18.8p 17.2p 49.0p
---------------------------------- --------- --------- ----------
10. Acquisition of subsidiaries
On 2 March 2017, the group acquired 100% of the issued share
capital of Bela Ischia Alimentos Ltda (Bela Ischia), a soft drinks
company in Brazil with a large presence in the key areas of Rio de
Janeiro and Minas Gerais. The acquisition strengthens both
Britvic's brand portfolio and distribution footprint in Brazil by
complementing our existing strengths in Sao Paulo and the north
east.
The initial fair value/acquisition accounting has been
determined provisionally. There is an ongoing review by management
of contingent liabilities, in light of the complex regulatory
environment in Brazil. This exercise involves an assessment of
likelihood and value of each contingent liability and will be
completed in the second half of the year alongside a review of
property, plant and equipment. The provisional amounts recognised
in respect of the identifiable assets acquired and liabilities
assumed are as set out in the table below.
GBPm
--------------------------- -----
Property, plant and
equipment 9.9
Intangible assets 26.9
Inventory 8.1
Trade and other current
receivables 8.0
Cash and cash equivalents 0.5
--------------------------- -----
Total assets 53.4
Trade and other current
payables 7.3
Interest bearing loans
and borrowings 3.3
Derivative financial
instruments 0.3
Deferred tax liabilities 0.2
Total liabilities 11.1
Total identifiable net
assets 42.3
--------------------------- -----
Goodwill 10.1
--------------------------- -----
Total consideration 52.4
--------------------------- -----
Satisfied by:
Cash 52.4
Total consideration 52.4
--------------------------- -----
Net cash outflow arising
on acquisition:
Cash consideration 52.4
Less: cash and cash
equivalent balances
acquired (0.5)
-------------------------- ------
Total consideration
transferred 51.9
-------------------------- ------
The consideration for the acquisition comprised of cash
consideration of GBP52.4m (BR$200.8m). There is no deferred
consideration.
Included in goodwill are certain intangible assets that cannot
be individually separated and reliably measured due to their
nature. These items include the assembled workforce and the market
presence which Bela Ischia has in the Brazilian market that Britvic
can use to exploit the potential of its global brands.
From the date of acquisition to 16 April 2017, the acquired
business contributed GBP4.2m to revenue and GBP0.9m to brand
contribution for the period.
Acquisition and integration related costs of GBP2.1m have been
incurred in the current period. These have been included within
exceptional and other items (see note 7).
* All GBP amounts are at the GBP:BR$ rate prevailing at the
acquisition date of 2 March 2017.
On 2 February 2017, the group completed the acquisition of the
trade and assets of East Coast Suppliers Limited a licenced
wholesaler in Ireland. The consideration for the acquisition is
EUR13.5m (GBP11.7m) comprising of an initial cash consideration of
EUR10.2m (GBP8.8m) with EUR2.8m (GBP2.4m) due 12 months from
completion, EUR0.3m (GBP0.2m) due 36 months from completion and
stamp duty of EUR0.2m (GBP0.2m). The initial fair value/acquisition
accounting has been determined provisionally with the identifiable
assets being customer relationships of EUR6.0m (GBP5.2m) goodwill
of EUR4.6m (GBP4.0m) and inventory of EUR2.9m (GBP2.5m).
11. Property, plant and equipment and Intangible assets
During the 28 weeks ended 16 April 2017, the group purchased
property, plant and equipment with a cost of GBP55.1m (28 weeks
ended 10 April 2016: GBP42.6m), and intangible assets with a cost
of GBP11.6m (28 weeks ended 10 April 2016: GBP2.6m). These amounts
exclude the assets acquired on the acquisition of Bela Ischia (see
note 10).
In addition, other assets with a net book value of GBP1.9m were
disposed of by the group during the 28 weeks ended 16 April 2017
(28 weeks ended 10 April 2016: GBP0.7m) resulting in a loss on
disposal of GBP1.9m (28 weeks ended 10 April 2016: loss on disposal
GBP0.7m).
12. Interest-bearing loans and borrowings
Components of current and non-current interest-bearing loans and
borrowings:
16 April 10 April 2 October
2017 2016 2016
GBPm GBPm GBPm
------------------------- --------- --------- ----------
Finance leases 2.7 0.3 3.8
2007 Notes 113.6 206.2 223.5
2009 Notes 118.8 162.0 174.5
2010 Notes 142.0 128.7 138.9
2014 Notes 126.0 115.7 122.9
2017 Notes 175.0 - -
Accrued interest 5.4 3.8 3.3
Bank loans 49.9 1.9 115.1
Capitalised issue costs (2.3) (2.4) (2.2)
------------------------- --------- --------- ----------
Total interest-bearing
loans and borrowings 731.1 616.2 779.8
------------------------- --------- --------- ----------
Current 120.1 161.2 288.1
Non-current 611.0 455.0 491.7
------------------------- --------- --------- ----------
Total interest-bearing
loans and borrowings 731.1 616.2 779.8
------------------------- --------- --------- ----------
Analysis of changes in interest-bearing loans and
borrowings:
28 weeks 28 weeks 53 weeks
ended ended ended
16 April 10 April 2 October
2017 2016 2016
GBPm GBPm GBPm
------------------------------- --------- --------- ----------
At the beginning of the
period 779.8 575.3 575.3
Loans acquired on acquisition
of subsidiary 3.3 33.5 36.7
Acquired debt repaid - (38.0) (38.0)
Net loans (repaid)/drawndown (67.8) 3.7 104.5
Partial repayment of USPP (119.6) - -
debt
Drawdown of 2017 USPP 175.0 - -
Issue costs (0.5) - -
Repayment of finance leases (1.1) - (0.1)
Amortisation and write
off of issue costs 0.6 0.4 0.6
Net translation (gain)/loss
and fair value adjustment (40.7) 39.9 100.9
Net movement in accrued
interest 2.1 1.4 (0.1)
------------------------------- --------- --------- ----------
At the end of the period 731.1 616.2 779.8
Derivatives hedging balance
sheet debt* (117.6) (110.4) (157.5)
------------------------------- --------- --------- ----------
Debt translated at contracted
rate 613.5 505.8 622.3
------------------------------- --------- --------- ----------
* Represents the element of the fair value of interest rate
currency swaps hedging the balance sheet value of the notes. This
amount has been disclosed separately to demonstrate the impact of
foreign exchange movements which are included in interest bearing
loans and borrowings.
13. Issued share capital
The issued share capital is wholly comprised of ordinary shares
carrying one voting right each. The nominal value of each ordinary
share is GBP0.20. There are no restrictions placed on the
distribution of dividends, or the return of capital on a winding up
or otherwise.
Issued, called up and fully No. of Value
paid ordinary shares shares GBP
----------------------------- ------------ -----------
At 27 September 2015 261,139,852 52,227,970
Shares issued 1,731,404 346,281
At 2 October 2016 262,871,256 52,574,251
Shares issued 652,045 130,409
At 16 April 2017 263,523,301 52,704,660
----------------------------- ------------ -----------
Of the issued and fully paid ordinary shares, 367,639 shares (2
October 2016: 500,983 shares) are own shares held by an employee
benefit trust. This equates to GBP73,528 (2 October 2016:
GBP100,197) at GBP0.20 par value of each ordinary share. These
shares are held for the purpose of satisfying the share
schemes.
14. Dividends paid and proposed
28 weeks 28 weeks 53 weeks
ended ended ended
16 April 10 April 2 October
2017 2016 2016
----------------------- --------- --------- ----------
Declared and paid
in the period
Dividends per share
(pence) 17.5 16.3 23.3
--------- --------- ----------
Total dividend (GBPm) 45.9 42.6 60.9
--------- --------- ----------
Proposed after the
balance sheet date
Dividend per share
(pence) 7.2 7.0 17.5
--------- --------- ----------
Total dividend (GBPm) 19.0 18.3 45.9
--------- --------- ----------
15. Derivatives and hedge relationships
As at 16 April 2017, the group had entered into the following
derivative contracts.
16 April 10 April 2 October
2017 2016 2016
GBPm GBPm GBPm
----------------------------------- --------- --------- ----------
Consolidated balance sheet
Non-current assets: Derivative
financial instruments
Fair value of USD GBP cross
currency fixed interest
rate swaps (1) 56.8 38.9 58.1
Fair value of GBP euro cross
currency floating interest
rate swaps (2) 2.6 6.2 1.0
Fair value of USD GBP cross
currency floating interest
rate swaps (3) 36.2 26.8 39.0
Fair value of forward currency
contracts - 5.0 0.5
----------------------------------- --------- --------- ----------
95.6 76.9 98.6
----------------------------------- --------- --------- ----------
Current assets: Derivative
financial instruments
Fair value of USD GBP cross
currency fixed interest
rate swaps (1) 10.1 32.7 41.6
Fair value of GBP euro cross
currency floating interest
rate swaps (2) 0.9 5.3 1.7
Fair value of USD GBP cross
currency floating interest
rate swaps (3) 8.5 13.0 16.8
Fair value of forward currency
contracts(1) 4.0 5.9 9.3
Fair value of forward currency
contracts 16.3 - 11.6
Fair value of foreign exchange
swaps 0.2 0.2 -
40.0 57.1 81.0
----------------------------------- --------- --------- ----------
Current liabilities: Derivative
financial instruments
Fair value of GBP euro cross
currency fixed interest
rate swaps (2) (0.3) (0.2) -
Fair value of forward currency
contracts(1) (0.7) (0.3) (0.3)
Fair value of Brazilian (0.3) - -
real USD cross currency
swap
Fair value of foreign exchange - (0.2) -
swaps
Fair value of equity forwards (0.4) (0.2) (0.8)
(1.7) (0.9) (1.1)
----------------------------------- --------- --------- ----------
Non-current liabilities:
Derivative financial instruments
Fair value of GBP euro cross
currency fixed interest
rate swaps (2) (1.6) (0.5) (3.6)
Fair value of forward currency (0.2) - -
contracts(1)
Fair value of equity forwards - (0.3) (0.7)
(1.8) (0.8) (4.3)
----------------------------------- --------- --------- ----------
(1) Instruments designated
as part of a cash flow hedge
relationship
(2) Instruments designated
as part of a net investment
hedge relationship
(3) Instruments designated
as part of a fair value
hedge relationship
Changes to derivative contracts
There have been no significant changes to derivative contracts
designated as part of hedge relationships in the period. The
derivatives and the hedge relationships are described in more
detail on pages 137 to 139 in the group's annual report for the 53
weeks ended 2 October 2016.
Impact of derivatives and hedge relationships on the
consolidated statement of comprehensive income/(expense)
28 weeks 28 weeks 53 weeks
ended ended ended
16 April 10 April 2 October
2017 2016 2016
GBPm GBPm GBPm
------------------------------------- --------- --------- ----------
Consolidated statement of
comprehensive income/(expense)
Amounts recycled to the income
statement in respect of cash
flow hedges
Forward currency contracts* (5.3) 1.7 (8.7)
Cross currency interest rate
swaps** (15.1) (24.3) (55.4)
(20.4) (22.6) (64.1)
------------------------------------- --------- --------- ----------
Gains/(losses) in the period
in respect of cash flow hedges
Forward currency contracts (1.1) 2.8 17.1
Cross currency interest rate
swaps 11.2 23.3 51.4
------------------------------------- --------- --------- ----------
10.1 26.1 68.5
------------------------------------- --------- --------- ----------
Exchange differences on translation
of foreign operations
Movement on cross currency
interest rate swaps 4.9 (14.4) (26.0)
Exchange movements on translation
of foreign operations 1.6 30.8 62.5
------------------------------------- --------- --------- ----------
6.5 16.4 36.5
------------------------------------- --------- --------- ----------
* Offsetting amounts recorded
in cost of sales
** Offsetting amounts recorded
in finance costs
16. Fair value
Hierarchy
The group uses the following valuation hierarchy to determine
the carrying value of financial instruments that are measured at
fair value:
Level 1: quoted (unadjusted) prices in active markets for
identical assets or liabilities.
Level 2: other techniques for which all inputs which have a
significant effect on the recorded fair value are observable,
either directly or indirectly.
Level 3: techniques which use inputs which have a significant
effect on the recorded fair value that are not based on observable
market data.
16 April 2017 Assets Liabilities
GBPm GBPm
---------------------------------------------------- ------ -----------
Level 1 - -
Level 2 - Derivatives used for hedging 119.1 (2.8)
- Financial instruments at fair value
through profit or loss 16.5 (0.7)
- Fair value of fixed rate borrowings - (642.5)
Level 3 - -
Total 135.6 (646.0)
---------------------------------------------------- ------ -----------
Fair values of financial assets and financial liabilities
The most frequently applied valuation techniques include using
present value calculations of forward pricing and swap models.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market, do not qualify as trading assets and have not been
designated as either fair value through profit or loss or available
for sale. Non-derivative financial liabilities are carried at
amortised cost.
All derivatives are valued using valuation techniques with
market observable inputs; this covers cross currency interest rate
swaps, interest rate swaps, FX forwards, FX swaps and share swaps.
The most frequently applied valuation techniques include forward
pricing and swap models using present value calculations. In
assessing the fair value of derivatives the non-performance risk of
both Britvic and its derivative trading counterparties has been
taken into consideration. Default credit risk has been measured and
the potential impact on derivatives valuations quantified. As at 16
April 2017, the potential impact from non-performance risk on the
fair value of the derivatives portfolio is not material.
As in the prior year, the carrying value of financial assets and
liabilities (trade and other receivables, cash and cash
equivalents, interest bearing loans and borrowings, trade and other
payables and derivatives) are considered to be reasonable
approximations of their fair values, except for fixed rate
borrowings which, at 16 April 2017, have a book value of GBP623.6m
(2 October 2016: GBP661.3m) compared to a fair value GBP642.5m (2
October 2016: GBP690.3m).
The fair value of the group's fixed rate interest-bearing
borrowings and loans are determined by using discounted cash flow
methods using discount rates that reflect the group's borrowing
rate as at the end of the reporting period. The own non-performance
risk as at 16 April 2017 was assessed to be insignificant.
17. Pensions
At 16 April 2017, Britvic plc has IAS 19 pension surpluses in GB
and NI totalling GBP14.4m and IAS 19 pension deficits in ROI and
France totalling GBP7.5m resulting in a net pension surplus of
GBP6.9m (2 October 2016: net liability of GBP17.4m). The net
surplus has increased primarily due to changes in the financial
assumptions and additional employer contributions made to the GB
plan of GBP20.0m partially offset by changes in demographic
assumptions.
The defined benefit section of the GB plan was closed to new
members on 1 August 2002, and closed to future accrual for active
members from 1 April 2011, with new members being invited to join
the defined contribution scheme. The 31 March 2016 actuarial
valuation of this plan was recently completed. Agreement has been
made with the scheme trustee on a number of key principles
including allowing a longer period to fund the deficit and agreeing
that no additional contributions will be payable over and above
those payments to 2019 agreed at the 2013 valuation. Future
contributions beyond 2019 will be on a contingent basis.
18. Capital commitments
At 16 April 2017, the group has commitments of GBP34.3m (2
October 2016: GBP50.6m) relating to the acquisition of property,
plant and equipment, which primarily relates to plant and machinery
for the business capability programme in GB.
19. Other reserves
Hedging Translation Capital Merger Total
reserve reserve reserve reserve
GBPm GBPm GBPm GBPm GBPm
At 2 October 2016 3.8 55.3 0.1 87.3 146.5
Gains in the period
in respect of cash
flow hedges 10.1 - - - 10.1
Amounts recycled
to the income statement
in respect of cash
flow hedges (20.4) - - - (20.4)
Deferred tax in
respect of cash
flow hedges 1.5 - - 1.5
Exchange differences
on translation
of foreign operations - 6.5 - - 6.5
Tax on exchange
differences - (0.9) - - (0.9)
Movement in non-distributable
profit - - 0.5 - 0.5
------------------------------- --------- ------------ --------- --------- -------
At 16 April 2017 (5.0) 60.9 0.6 87.3 143.8
------------------------------- --------- ------------ --------- --------- -------
Hedging Translation Capital Merger Total
reserve reserve reserve reserve
GBPm GBPm GBPm GBPm GBPm
------------------------------- --------- ------------ --------- --------- -------
At 27 September
2015 (8.1) 14.9 - 87.3 94.1
Gains in the period
in respect of cash
flow hedges 26.1 - - - 26.1
Amounts recycled
to the income statement
in respect of cash
flow hedges (22.6) - - - (22.6)
Amounts recycled
to goodwill on
acquisition of
subsidiary 10.2 - - - 10.2
Tax recycled to
goodwill on acquisition
of subsidiary (2.0) - - - (2.0)
Deferred tax in
respect of cash
flow hedges (0.5) - - - (0.5)
Exchange differences
on translation
of foreign operations - 16.4 - - 16.4
Tax on exchange
differences - 1.9 - - 1.9
Movement in non-distributable
profit - - 0.2 - 0.2
------------------------------- --------- ------------ --------- --------- -------
At 10 April 2016 3.1 33.2 0.2 87.3 123.8
------------------------------- --------- ------------ --------- --------- -------
Hedging reserve
The hedging reserve records the effective portion of movements
in the fair value of forward exchange contracts, interest rate and
cross currency swaps that have been designated as part of a cash
flow hedge relationship.
Translation reserve
The translation reserve includes cumulative net exchange
differences on translation into the presentational currency of
items recorded in group entities with a non-sterling functional
currency net of amounts recognised in respect of net investment
hedges.
Merger reserve
The merger reserve arose as a result of the non pre-emptive
share placement which took place on 21 May 2010. It was executed
using a structure which created a merger reserve under Section
612-3 of the Companies Act 2006.
Capital reserve
The capital reserve relates to accumulated earnings which are
not distributable to shareholders.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DGGDUCDDBGRX
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